Only 29% of Pension Fraud Reports Investigated by Police Since 2015

With pension pots being so potentially lucrative, and often being paid out in one lump sum, they are a huge target for scams and fraud, and even financially savvy individuals have been burned by an ‘exciting investment’ such as renewable energy bonds, forestry, or property development opportunities. According to Action Fraud, the average value of a pension scam in 2021 was £75,000 per victim.

Since 2015, people of pension age have had access to more options for their pension pot, something scammers are acutely aware of.

Pension scams can take a variety of forms including:

• Liberation – the scammer makes claims that encourage the victim to access their pension before they turn 55, leaving them with a large tax bill.
• Investment – the victim is persuaded to transfer their pension pot to the scammer with the promise of ‘impressive returns’ which do not exist.
• Transfers – an unregulated adviser encourages the victim to transfer their pension pot to a new scheme (either a scam or genuine) in order to receive a fee.

Scammers will also use false promises of ‘free’ pension reviews or advice in order to access a victim’s pension information and use the details to target them for another type of scam or to sell their personal details to other fraudsters.

Each scam is different, as scammers deploy a range of tactics to try and avoid detection and target as many victims as possible. There are several common red flags and being aware of these warning signs might be the difference between keeping or losing your life savings.

Some tell-tale pension scam signs include:

• A call, text, email, or social media message out of the blue. Cold calling about pensions was made illegal in 2019 meaning that you should only ever legitimately be contacted by someone you have requested information from.
• A sense of urgency or high pressure: if your ‘adviser’, or whomever you are speaking to about your pension, is trying to rush you to decide on an investment, it is probably not legitimate. Better to take your time and miss out once, than rush and lose your pension.
• Use of jargon and big claims. If they are claiming to have access to ‘tax loopholes’, ‘upfront cash incentives’, ‘tax savings’, ‘pension liberation’ or other exciting, but slightly mystifying concepts, it is best to walk away.
• Use of PO boxes and mobile phone numbers rather than registered offices and company telephone numbers. You can check the FCA’s register to make sure anyone offering you advice is authorised and if so that they’re permitted to offer pension advice.

It is advisable to seek your own independent financial advice before making any decisions about changing your pension arrangements. Use the Financial Conduct Authority (FCA) financial services register to ensure anyone you speak with is registered and legitimate.

The first thing you should do if you believe you have fallen victim to a pension scam, is to report it to Action Fraud, who will – if eligible – refer the case to the NFIB and the police. However, as the FOI results reported by Quilter show, this will not necessarily result in a criminal case but, if it does, it may be a very long and drawn-out process.

The Financial Ombudsman Service (FOS), an independent government-backed body, resolves disputes between financial institutions and consumers and so, depending on the nature of the pension scam, there may be an avenue for an investigation and compensation.

Sarah Spruce, Head of the Pension Fraud team at TLW Solicitors commented:

“It is understandable that some pension scam reports need to take priority over others when it comes to criminal investigations but, if you are one of the 71% of individuals whose case has not been referred to the police, this may not come as much of a comfort.

There are other steps that can be taken by scam victims to seek compensation, so I would encourage anyone who has been targeted by a pension scammer to get in touch with my team and we can have a no-obligation chat about your case.

I would also urge anyone with elderly or vulnerable friends or family to ‘check in’ with them and make sure that have not been or are at risk of becoming a victim of investment fraud.”